ELECTRIC VEHICLES CHARGING AHEAD

 Electricity is really just organized lightning. ~ George Carlin  

Watt have we been waiting for? Will the era of electrified transportation finally arrive, after being promoted assiduously for years without much to show for it on roadways? Electric vehicles (EVs), nevertheless, have contributed to Elon Musk becoming the world’s wealthiest person.

It seems from recent events that EVs will at some point get much more numerous. Alas, the EV boulevard to nirvana still has several potholes. EV market-makers need to organize their lightning, so it’s not just a “storm” in the San Francisco Bay Area, but everywhere in America.

San Francisco amid a lightning storm, August 2020.

First, the encouraging news. Mary Barra, chief executive of General Motors (GM), announced on January 28 that GM will eliminate production of gasoline- and diesel-fueled light-duty cars, vans and SUVs by 2035 and become carbon-neutral by 2040. Her statement represents a fundamental U-turn and shift for GM, who upset environmentalists when it agreed with #45s reductions of auto fuel-efficiency rules in 2019.

GM is now “all in” and charging ahead with EVs. It expects to invest $27 billion in EVs and associated products through 2025 and will eventually sell about 30 kinds of EVs. The media has characterized GM’s announcement as game-changing. It may be, although the event’s timing leads some to believe it’s as much a political message as a corporate one, coming a week after President Biden’s inauguration.

GM is not alone. Volkswagen, our planet’s largest vehicle manufacturer, is expecting to introduce nearly 70 new EVs in the next decade. Other manufacturers like Toyota, Ford and Volvo also have made big EV investments. The EV market champion remains Tesla Motors, which produces nothing but EVs. Tesla has dominated the market ever since it began selling cars in 2008. Its EV market share hovers around 80%. Nice work, Elon.

Taking a macro view of the US vehicle market, GM along with its traditional competitors like Ford, Fiat Chrysler, Toyota and Volkswagen have been facing a much-changed market for some time. The recent public voltage about how EVs will reshape transportation has been asserted for years without much actual confirmation.

The real upheaval in the auto business has not been EVs slender gains. It’s been customers’ lane-shifting away from wanting traditional cars to buying light trucks, which include not only pickups but SUVs and minivans.

Very, very few car purchasers have been buying Buick sedans, like my grandfather actually did way back in the day. US and Canadian customers’ overwhelming preference is for 4-wheels that are not connected to a traditional sedan. This big shift has progressed since the mid-1990s.

Customers have strongly favored SUVs and pickups, as shown below. Last year, at least 90% of every major domestic car manufacturer’s sales were light trucks, which include SUVs and minivans.

Light Truck* Share of US Vehicles by Manufacturer, 2020 

Light Truck Sales /  Manufacturer	GM	Ford	Fiat Chrysler	Total US
By vehicles sold	90%	91%	91%	76%
By retail value	92%	94%	91%	81%

 Source: Bloomberg Businessweek. *Includes SUVs & Minivans   

SouFor this reason, the sun has already set for sedans’ production at GM and mostly at Ford. Say goodbye to GM’s Chevy Impala and Ford’s Fusion, along with 24 other sedans these two firms made. Chrysler-Dodge will continue making its two sedan types. Not to worry sports fans, thankfully the Mustang, Corvette and Rolls Royce Dawn (starting at $356,500) will still be available.

The 12-year-old US market for EVs remains a thin one. EV sales represent just 1.2% of 2020 US new vehicle sales. GM and other veteran car manufacturers who are placing large gambles on EVs clearly want to change that, as does Tesla.

Throughout EV market history, massive optimism about future growth has far outweighed actual EVs sales. A recent forecast stated that EV annual sales in 2030 will exceed 3.5 million vehicles, which is more than 20 times as many EVs sold last year.

This might happen, but such giant changes in customers’ car purchasing seems founded in fantasyland. What’s very clear is it won’t occur at all without an enormous push via federal, state and local government intervention and a revolution in consumers’ predilections for EVs.

Large increases in EV sales have already been promoted by Dems in the form of significant subsidies that began for the 2010 model year. Subsidies remain vital because EVs cost more for customers to buy than comparable gas-powered vehicles. Many potential purchasers are sensitive to the level of such EV subsidies. When the State of Georgia and Hong Kong eliminated their EV subsidies, sales crashed.

Purchasers of eligible EVs may now receive an IRS tax credit from $2,500 to $7,000. These federal tax credits are available if the manufacturer has not yet sold 200,000 of the EV model. Currently both new Tesla and GM’s EVs cannot qualify because they’ve sold more than the maximum allowed. Such subsidy phase-out is a good idea, that also has been used for solar panels, so they don’t become eternal.

States also offer subsidies, including California, which has been on the forefront of the EV market. By itself, California accounts for 48% of all EVs sold nationwide. The SF Bay Area has surged to having the highest market share of EVs in the nation.

The California Air Resources Board (CARB), offers up to $7,000 in EV rebates for the purchase or lease of new, eligible EV vehicles. The CARB also has mandated that zero-emission vehicles (ZEVs) like EVs achieve specified minimum market shares in the state’s light-vehicle sales.

These mandates began in 1990, none of which were met nor could have been attained by manufacturers at that point. At best, the mandates  were aspirational and took no account of existing customers’ preferences. They did push needed EV technology development, meaning battery performance. For a long time, the CARB did nothing to enhance EV “infrastructure” in the state.

The CARB’s current ZEV mandate, stated in 2003, is for ZEVs to attain a 10% market share. Most recently, the EV share of cars sold in California is 7.9%. It’s the largest of any state and still below the required CARB mandate, 17 years later. EVs remain a big policy priority for California, but not for Californians.

Eight years ago, Governor Jerry Brown signed an executive order that set a long-term target of having 1.5 million ZEVs on California’s roadways by 2025. By December 2019, 670,000 EVs had been cumulatively sold in the Golden State.

In addition, Governor Gavin Newsom announced last September that California will disallow the sale of gasoline-powered cars by 2035. Take that, you heathens who keep buying non-EVs.

Not to be left behind, the Berkeley city Council is considering how to ban the sale of new gasoline-powered vehicles by 2027, eight years ahead of the rest of California. Prematurely instituting such a ban could reduce the city’s tax revenues by at least 10%. Berkeley's business tax revenues have already shrunk 13.2% due to Covid and it faces a $40M budget deficit. Do the councilmembers absurdly think their non-EV car-buying residents won’t simply drive a couple of miles to purchase such autos in Oakland or elsewhere. Perhaps the Council plans to pull up its drawbridges seven years from now.

President Biden has already signed an executive order that calls for the federal fleet of about 645,000 vehicles, principally of the US Postal Service, to be converted to electric power. He has also vowed to expand charging stations for EVs, revise and extend EV tax credits and tighten fuel economy standards for gas-powered vehicles. It’s doubtful that he will use reconciliation to legislate these actions, so when this becomes law is unknown.  

Such actions and incentives will help, but immense changes in the nation’s vehicle fleet will not be possible without vastly more consumers choosing to buy EVs. Mainstreaming our EV market will require convincing “regular people” like the Katharine and Jack Cooper family, who have 2 young, mini Coopers, to buy an EV, and not feel like they’re being forced to. In the main, pro-active EV policy makers have mostly forgotten about folks like the Coopers. Instead, they’ve principally dealt with suppliers of EVs, hoping that more supplied EVs will in turn create more demand for them. Such thinking was popular among 19th-century economists, but not since then.

The sooner Katharine and Jack become convinced about EVs, the better for our environment. People like the Coopers represent more typical, and far more numerous, car purchasers than many of the privileged folks, to use a currently-popular term, who have bought most EVs so far.

Changing the Cooper’s long-established automobile purchase habits so they actually consider buying an EV will require coordinated government influence. It will be marathon rather than a dash. To date federal and state EV policies have been sadly unidimensional, offering mainly financial incentives, which are useful but not sufficient to radically electrify transportation. Typical car-buyers’ behavior will need to change appreciably, if EVs are to become mainstream.

What’s needed? First, capable, moderately-priced EVs must be available in the marketplace. This will happen over the coming years. Thanks Elon and now Mary.

Second, these vehicles must be comparable with non-EV vehicles, regarding cost, range, performance and supporting infrastructure, especially having a sufficient number of standardized, fast-charging stations across the US, including at multi-tenet buildings.

Nationally, there are about 115,000 gas stations and only 25,000 EV charging stations. Sadly, EV infrastructure is lagging due to an electric chicken-and-egg problem. Increasing the number of charging stations will be costly with so few EVs amping along our roads, but without more fast-charging stations, less people will be interested in buying/leasing an EV. A typical Level-3 commercial, fast-charging station can cost $50,000, taking about an hour for a full charge. A Tesla “supercharge” facility can cost five times as much.

Successfully creating an integrated, electrified transport system is ultimately up to us consumers. Manufacturers like GM, Ford, Volvo, Tesla and others will contribute by offering an expanded variety of attractive, high-value EVs. But there’ll not be any EV tangoing in Paris Kentucky, Paris Oregon or Paris Wisconsin without folks like the Coopers becoming satisfied, repeat EV owners. As Hamlet said, there’s the rub.